It really depends on your needs and how you use your computer. For example, if you’re the only user and you know you only keep stuff in your My Documents folder, then really you only “need” to back up My Documents.
The AppData folder contains a lot of temp files and misc. junk that Windows programs use when running. It’s mostly the kind of stuff that even if you had to do a restore you might now know what to do with it.
Unfortunately, some programs keep useful info in there as well such as browser bookmarks or Thunderbird email files.
If you’ve got the space / time, the EASIEST thing to do is include everything in that folder. But as it does have temp files in it you’ll find your back sets growing more than “necessary” since you’re backing up versions of temp files.
There is an “Advanced options” --exclude-files-attributes parameter which can be used to automatically exclude things temporary or system files, but won’t catch ALL of them.
Note that more recent Canary versions of Duplicati include a new --default-filters parameter as well as support for Windows registry based file/folder exclusions: